SoftBank Group may turn profitable despite Vision Fund’s $48B loss.
SoftBank Group may turn profitable despite Vision Fund's $48B loss.
The Blockchain Industry: A Path to Profit for SoftBank’s Vision Fund
SoftBank Group’s Vision Fund has experienced multiple losses in recent quarters, but its involvement in startups focusing on artificial intelligence (AI) is expected to bring about a much-needed turnaround. The company is projected to announce a profit of ¥73 billion in its upcoming report, signaling a potential shift in its financial fortunes1.
SoftBank’s Vision Fund: Recent Performance
Over the past two fiscal years, SoftBank’s Vision Fund suffered losses amounting to ¥6.9 trillion (around $48 billion)2. However, there are indications that the tide is changing. Astris Advisory analyst Kirk Boodry estimates that Vision Fund’s public holdings increased by $1.1 billion in the June quarter3. This upward trajectory is largely attributed to the 14% and 20% rise in Grab Holdings Ltd. and DoorDash Inc., respectively4. Additionally, the strong performance of SoftBank shares, which surged by 31%, and the 9% increase in e-commerce giant Coupang Inc., greatly contributed to the positive outlook5.
Boodry predicts that Vision Fund’s performance in July further bolstered its public holdings by $3.9 billion6. If this trend continues, the Vision Fund could achieve its most substantial growth since the January-March quarter of 20217. This resurgence would mark a significant turning point for SoftBank and its investment strategy in the AI sector.
Challenges Faced: SoftBank’s Vision Fund Record Loss
In May, SoftBank’s Vision Fund reported a record loss of ¥4.3 trillion ($32 billion) for the fiscal year ending March 31st8. This loss was over 68% worse than the previous year’s figures, highlighting the challenges faced by the company9. While SoftBank did benefit from gains in companies like Uber, it encountered substantial losses from other investments10. For example, SoftBank reported losses of $1.6 billion each in GoTo and SenseTime Group, while DoorDash cost the company $800 million11. Despite these setbacks, SoftBank remains optimistic and is actively seeking new avenues for profit.
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The Potential Impact of Arm IPO
SoftBank’s decision to pursue a US-only initial public offering (IPO) for Arm, its semiconductor technology firm, may provide a significant breakthrough for the company12. Initially planned for listing in the UK, Arm CEO Rene Haas confirmed that the US option presents the best way forward for the company and its stakeholders13. Haas explained that despite ongoing engagement with the British Government and the UK’s Financial Conduct Authority, the US listing was ultimately deemed the most favorable course of action14.
Arm, a chip manufacturer serving prominent semiconductor companies like Nvidia, Intel, Qualcomm, and AMD, aims for an IPO valuation between $60 billion and $70 billion15. The IPO is slated for September and is likely to be the largest tech offering of 202316. Notably, several industry giants have expressed interest in participating as anchor investors17. This development opens up a new avenue for SoftBank to improve its fortunes and potentially regain its position as a leader in the tech investment landscape.
SoftBank’s Vision Fund, after experiencing losses in recent quarters, may finally see a significant turnaround thanks to its active involvement in AI-focused startups and the upcoming IPO of Arm. The positive performance of Grab Holdings Ltd., DoorDash Inc., SoftBank shares, and Coupang Inc. demonstrates the fund’s potential for growth18. Additionally, SoftBank’s decision to pursue the US listing for Arm’s IPO highlights its commitment to finding lucrative opportunities in the tech sector19. The success of this IPO could signal a resurgence for SoftBank and position it to profit from the ever-evolving blockchain industry.